Donors and Investors Overview
In Eastern Europe and Central Asia (ECA) microfinance markets are more closely linked with mainstream financial sectors than in other regions. Whereas the largest microfinance institutions are banks and can raise client deposits, nonbank microfinance institutions mostly depend on foreign funding and loans from local banks. According to the CGAP Microfinance Funder Survey, microfinance in ECA attracts more foreign investment than any other region. As of December 2009, almost $6.2 billion were committed to the region, representing 29% of total cross-border funding to microfinance worldwide. While microfinance markets in ECA experienced an overall contraction of loan portfolios by over 10% in 2009, funding continued to increase, mostly driven by Development Finance Institutions (DFIs) such as KfW and EBRD. ECA is the only region where public funding grew faster than private funding in 2009. Public funding grew by 26% (against 12% globally), while private funding grew by 14% (33% globally).
Twenty-eight public funders (bilateral and multilateral agencies and development finance institutions), 11 foundations/NGOs and 53 Microfinance Investment Intermediaries (MIIs) are active in ECA. Public funders, mostly DFIs, provide 68% of commitments. However, ECA is the second region, after LAC, in terms of private funding and number of active MIIs. The largest funders in the region are KfW, EBRD, IFC, EIB and FMO (see the table below). Taken together, they account for 57% of funding committed to ECA.
A large part of cross-border funding to ECA (55%) is channeled through microfinance investment intermediaries. Debt continues to be the most used instrument to fund microfinance in ECA.
Top Five Funders in ECA
| |
Percentage of Total Funding Committed |
| KfW |
21% |
| EBRD |
20% |
| IFC |
9% |
| EIB |
4% |
| FMO |
3% |
| All 5 |
57% |
Source: 2010 Cross-border Funding Survey
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